FAA no closer on financing plans

 - September 15, 2006, 4:47 AM

In testimony before the Senate appropriations subcommittee on transportation early last month, FAA Administrator Marion Blakey continued to play her cards close to the vest on plans to finance the agency in the future.

Ostensibly, Blakey appeared before the Senate panel to talk about the FAA’s Fiscal Year 2007 budget. It proposes $13.7 billion in new spending commitments for the FAA, a $560 million decrease from FY2006. Sen. Kit Bond (R-Mo.), subcommittee chairman, chastised Blakey for the Bush Administration’s budget request and sought to ascertain the White House’s reasoning for the funding cut.

“If the Administration were to follow the blueprint of Vision 100–the authorizing legislation for aviation–in the same manner in which we funded needed highway improvements under SAFETEA [the Safe, Accountable, Flexible, Efficient Transportation Equity Act],” said Bond, “the Airport Improvement Program [AIP] number for Fiscal Year 2007 would be $3.7 billion, rather than the $2.75 billion requested.”

Bond acknowledged that the Airport and Airway Trust Fund “is slowly going broke and needs real reform.” He said the financing structure is a key issue facing Congress and urged the administration to announce its proposal on the funding of the aviation trust fund as soon as possible.

Blakey said she and Transportation Secretary Norman Mineta “continue to place a very high priority on finalizing our proposal. It’s undergoing review right now at the most senior levels of the administration. And I’m confident resolution is just around the corner.”

All taxes that go into the trust fund will expire on Sept. 30, 2007, and the FAA wants to revamp its revenue stream. It has been talking with stakeholders for more than a year about how to tie the cost of services to revenue, which many see as a user-fee system. The airlines–through ticket taxes collected from their passengers–account for about half of the FAA’s annual budget.

But they contend they are paying 90 percent of the FAA’s cost while using airspace only 70 percent of the time. They further argue that business aviation does not pay its fair share.

The Air Transport Association, which represents the airlines, is backing a plan that would place a tax on the number of “departures” and “time in system.” It would give the airlines the most influence among ATC system stakeholders.

Other members of Congress are not happy with the plan to slash airport funding. “We must make robust investments in our airport infrastructure today to meet anticipated future demands,” wrote Rep. James Oberstar (D-Minn.) and Rep. Jerry Costello (D-Ill.) in a letter to all other House members.

“The Bush Administration’s FY2007 budget request is shortsighted…We urge our colleagues to reject this flawed policy and join us in [asking] the leadership of the Committee on Appropriations to support the full authorized level of funding ($3.7 billion) for the AIP program.”

Small Airports in Jeopardy
AOPA called the cuts a double whammy for general aviation because it removes entitlements for more than 2,500 GA airports that serve GA exclusively. Airline airports collect airline landing fees, passenger gate lease fees and rent from terminal restaurants and stores, as well as passenger facility charges, to finance construction projects. They can also float bonds and borrow money to finance major programs.
GA airports must rely only on fuel sales, tiedown fees and hangar leases to generate revenue. But federal AIP funding also ensures that the airport will remain open. When an airport accepts AIP funds part of the agreement is that the airport will continue to operate for 20 years, or in perpetuity if the money is used to buy land.

“I am very concerned about [what] cuts to the AIP program formula will mean specifically to the construction needs of airports, especially small airports, since larger airports tend to rely on per capita passenger facility charges or bond issues to pay for their capital development,” Bond told Blakey.

“We should be investing more,” said Sen. Patty Murray (D-Wash.). “But instead, the Bush Administration wants to cut our support for America’s airports…I believe the FAA deserves a better budget, it deserves better leadership from the secretary on down, it needs better management when it comes to these multimillion-dollar procurements, and it needs better attention from this Congress.”